Cannabis Weekly Round-Up: HEXO Fires Founder, Gets New CEO

A middling Canadian cannabis producer announced an executive turnover plan this week after receiving a critical investor letter in September.

Meanwhile, a Canadian exchange-traded fund (ETF) company released lists of new additions to both of its cannabis funds as part of its quarterly rebalancing.

Keep reading to find out more cannabis highlights from the past five days.

New HEXO CEO gets confirmed

This past week, HEXO (NASDAQ:HEXO,TSX:HEXO) announced the appointment of Scott Cooper as its new president and CEO. Cooper is an addition from Truss, HEXO’s beverage joint venture with Molson-Coors Canada, where he also serves as president and CEO.

The company announced Cooper will be expected to fill both roles for the next six months as a way to “ensure a smooth transition for the business.”

“I want to thank outgoing CEO Sebastien St-Louis for his tremendous effort in establishing growth and delivering a solid position from which the Company can move forward,” Cooper said.

A report from BNN Bloomberg indicates that an investor letter sent to the HEXO board last month by Adam Arviv directly led to the dismissal of St-Louis.

The letter berates the former executive for “continuously (making) negligent decisions and (delivering) poor financial performance.” In its report, BNN Bloomberg said:

The letter states that St-Louis over-leveraged Hexo to help finance deals to acquire “distressed” cannabis operators Zenabis Global Inc. and 48North Cannabis Corp.

Arviv and the Redecan ownership group cumulatively own about 70 million of Hexo’s shares, making them one of the company’s largest shareholders.

In his departure statement, St-Louis, who founded the company originally, said he is proud of HEXO and thinks the future of the company is bright. “As a significant shareholder I look forward to the Company’s next exciting stage of growth,” he said.

Canadian ETF maker shares new cannabis additions

Horizons ETFs Management (Canada) completed its quarterly rebalancing for two of its highlight cannabis funds, the Horizons Marijuana Life Sciences Index ETF (TSX:HMMJ) and the Horizons US Marijuana Index ETF (NEO:HMUS).

Steve Hawkins, president and CEO of Horizons ETFs, offered his own commentary on the state of cannabis investments in both the US and Canada.

For HMMJ, Hawkins said Canada has “largely languished, with valuations further exasperated by recent market volatility.” When it comes to the US market, the ETF executive said it no longer seems like 2021 will see any kind of significant legalization efforts.

“While it looks like America’s ‘marijuana moment’ won’t happen in 2021, there are still several initiatives underway that are paving the way for broader liberalization in the United States,” Hawkins said.

For HMMJ the new additions to the portfolio are:

• Grove (NASDAQ:GRVI)
• India Globalization Capital (NYSE:IGC)
• IPower (NASDAQ:IPW)
• MYMD Pharmaceuticals (NASDAQ:MYMD)
• Power REIT (NYSE:PW)

These are the newly added stocks for HMUS:

• Ceres Acquisition (NEO:CERE)
• Glass House Brands (NEO:GLAS)
• Grove (NASDAQ:GRVI)
• iAnthus Capital Holdings (CSE:IAN)
• India Globalization Capital (NYSE:IGC)

Cannabis company news

• Tilray (NASDAQ:TLRY,TSX:TLRY) signed a national brokerage agreement with Great North Distributors to exclusively represent its adult-use cannabis products. “This agreement will further drive exceptional route-to-market efficiencies for our comprehensive portfolio of adult-use cannabis brands and innovative 2.0 products,” Irwin Simon, chairman and CEO of Tilray, said.

• Innovative Industrial Properties (NYSE:IIPR)confirmed a new acquisition deal for a 201,000 square foot industrial property in Desert Hot Springs, California, while also entering into a long-term lease with a company called Gold Flora. The deal is valued at US$51 million.

• The Green Organic Dutchman Holdings (CSE:TGOD,OTCQX:TGODF) sent its first commercial shipment to Australia for a lineup of  medical cannabis products. “We remain laser-focused on execution as we chart the course for future growth, including opportunities in international markets,” CEO Sean Bovingdon said.

• Halo Collective (NEO:HALO,OTCQB:HCAND)told investors it has changed the compensation program for the company’s senior officers and directors. All compensation for the remainder of 2021 will be handled in common shares of the company. The company expects to save US$2.1 million in cash. “What better way to demonstrate our confidence — and alignment with shareholders — than for the 15 most senior leaders of the Company to all elect to take their compensation in Common Shares in lieu of cash,” Kiran Sidhu, CEO of Halo, said.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.